ENERGY: Navy opposes SDG&E rate increase

SDG&E should not have ratepayers cover property insurance for top executives and their families, the U.S. Navy wrote in a filing to the California Public Utilities Commission earlier this month.

The Navy buys electricity from San Diego Gas & Electric Co. for its bases in San Diego County, including Camp Pendleton and Miramar and ships in port. In its filing, the Navy pointed out several ways it thinks SDG&E overestimated its costs when
it asked
for a $1.1 billion raise over the next four years, ranging from $34,000 in insurance costs for executives and their families to assuming responsibility for some of the damage from the 2007 wildfires.

As part of its request, SDG&E asked regulators to pay for property and liability coverage on top executives and their families that would kick in after those executives' personal insurance ran out. Over four years, the request would add up to $94,000.

"Ratepayers should not be required to fund these additional benefits applicable to only key executives," the Navy wrote.

On the other end of the scale, the Navy also accused SDG&E of overestimating the increase in its customer base.

"Information provided by the Company (SDG&E) shows that customer growth has declined and may not reach the levels SDG&E projects," the Navy wrote. "Furthermore, the Company spent approximately $9 million less in 2010 for new business capital, which again shows that the Company's projections for capital expenditures were overstated."

The Navy has also not forgiven SDG&E for starting three wildfires in 2007. While there's general agreement that SDG&E's powerlines started the Witch Creek, Rice, and Guejito fires, the Navy pushed forward an investigation by commission staff that accused SDG&E of failing to maintain its lines adequately. In 2010, SDG&E settled the commission's lawsuit for $14.8 million and no admission of wrongdoing.

"The contribution of SDG&E's inadequate tree trimming to the wildfire losses was not considered by the Commission," the Navy wrote, "But should be taken into account in SDG&E's (general rate case), and should result in SDG&E being held responsible for some of the cost increases."

The commission is expected to make a decision on the rate increase request this summer. If approved, the increase would be applied to bills retroactively to Jan. 1, 2012.